Improving Project Management in the Department of Energy (1999) / Chapter Skim
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Appendix B Communication of Project Costs and Durations
Appendix B Communication of Project Costs and Durations
Pages 97-105
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From page 97... ...
11~. Allowances for cost uncertainties and unknown cost factors can be developed through risk assessments, scenario analyses, contingency assessments, sensitivity analyses, and related methods.
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From page 98... ...
They include the effects of political change, Congressional actions, changes in general DOE policies, local, state, or tribal influences, and all changes in cost or schedule originating outside the project for reasons unrelated to the project's purpose or objectives. The different types of uncertainties have often been treated differently, and estimates often do not include external unknowns, uncertainties, or risks because cost estimators did not know how to estimate them and because they are externally controlled, hence deemed not to be the responsibility of the project.
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From page 99... ...
A-94, Guidelines and Discount Rates for Benefit-CostAnalysis of Federal Programs, states: ~ .o u' u' o In _ ~ _ to , m . Actual costs Average +/- Single standard deviation 1 2 3 4 5 Estimate class*
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From page 100... ...
For example, studies of past activities have documented tendencies for cost growth beyond initial expectations; analyses should consider whether past experience suggests that initial estimates of benefits or costs are optimistic. DOE cost estimates violate OMB Circular No.
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From page 101... ...
This format directly shows the likelihood of the cost overrunning any given amount. "An accurate project contingency will allow a project team to avoid a cost overrun by establishing a project budget large enough to absorb cost increases driven by project uncertainties." (Diekmann, 1996, p.
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From page 102... ...
102 7' IMPROVING PROJECT MANAGEMENT IN THE DEPARTMENT OF ENERGY \ Mode ~ Mean Median FIGURE B-3 Skewed probability distribution for cost. 1 0.05 O Cost \ Cost Median 95% confidence FIGURE B-4 Probability of final project cost exceeding any value.
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From page 103... ...
and other studies (IPA, 1993, 1995~. Regression coefficients are determined by an objective statistical analysis of previous costs; then specific project parameters are used as independent variables in these models to predict expected costs and establish confidence limits.
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From page 104... ...
Diekmann and Featherman (1998) discuss risk analysis simulation models developed with funding by EM-432 and the Center for Risk Management at Oak Ridge National Laboratory; and Diekmann developed a methodology for predicting cost and schedule growth "based on data from eight ER [environmental restoration]
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From page 105... ...
Department of Energy Environmental Restoration Projects. A Report to the Center for Risk Management, Oak Ridge National Laboratory.
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